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Walt Disney, the US media conglomerate, has recently narrowed the field of bidders for its ABC Radio division.

The move should pave the way for a sale of the unit before the end of the year. Analysts have estimated the unit could be valued at between $2bn and $3bn.

People familiar with the matter on Tuesday night said that only three groups remained in the auction to acquire ABC Radio, after months of negotiations and a series of rounds of bidding.

The potential buyers were Entercom Communications of Pennsylvania, Cumulus Radio of Georgia – which recently acquired a large portfolio of radio assets from Susquehanna Pfaltzgraff, a Pennsylvania-based conglomerate – and Kohlberg Kravis Roberts, the US private equity group that unexpectedly emerged as a player in the race in recent days. It was still unclear on Tuesday whether KKR had teamed up with a trade buyer in order to win the bidding, and perhaps structure the deal as a Reverse Morris Trust, under which ABC Radio would be spun off and then sold with Disney shareholders retaining a large stake.

The Disney deal comes at a time when valuations in the radio sector are at a much lower level than when most of the mergers and acquisitions activity occured in the early 1990s. However, the relatively high valuation of $1.2bn obtained by Susquehanna in its sale to Cumulus encouraged Disney to proceed, in the hope of clinching a deal before the end of the year, said industry insiders.

Disney’s radio group includes 72 stations, with 44 in the top 25 markets. In 2004, Disney group reported an estimated $710m in revenue, according to a recent report.

The company decided to consider a sale following the appointment of Bob Iger as the new chief executive, which prompted a review of all the media group’s assets – which include theme parks, animated film production, film studios and the ABC television group.

Disney declined to comment. Its shares, which have been rising over the past month, closed down 0.6 per cent at $24.93 on Wednesday on the New York Stock Exchange.

A sale of its radio unit would represent another step in the reshaping of the global media industry, which is haveing to cope with depressed stock prices and increased competition from telecommunications providers and technology providers.

Advising Disney in the auction are investment bankers at Goldman Sachs, which are also working with Knight Ridder, the newspaper chain, on its search for a buyer.